HI6026 Accounting Theory and Current Issues Assignment Help

HI6026 Accounting Theory and Current Issues Assignment Help

Introduction

In present business scenario it is important to adopt and use different business theories which are making impact on the business in positive or negative manner. This report is based on detail study of Bio-Sustainable Feeds (BSF) Ltd. which an Australian research company and doing its activities in the research and development field. Company is also listed in Australian stock exchange (ASX) and is a growing company of Australian marketing plan. Plant based feeds are harming the environment and also decreasing the available food for the population as in it is used for making fish food to increase the quality of fishes (CBC. 2016). Company believes that there are various ways by which there can be produced fish feed and plants and crops can be saved. BSF is developing and conducting different research programs to find out different alternatives for generating fish feed and developed a research of making fish feed from bacteria from the residues of sugarcane or the methane gas from the sewage are some examples of this new development.

Australian government has decided to support this innovative and beneficial idea by offering grants and different advancements which can ultimately motivate the company to continue its research effectively. Government offered $500 million AUD to use in the process of this research programs with a condition that is the company has to invest or spend at least $100 million AUD every year on developing other aqua culture feeds. BSF is having patent on its research which is having its fair market value and government is offering different offers and condition which can motivate the company to sell its patent on a good return. This report will define various aspects of BSF Ltd and its impact on the market in different ways and manner.

1. Discuss the nature and value to society of the research being done by BSF Ltd.

BSF Ltd. is a research company conducting its research activities in the field of aqua-culture development and increasing quality of the fishes by feeding those using different ways and methods. This is helping in providing food to the required population by saving the crop from using in making fish feed from plants and crops. BSF Ltd is developing its research to identify ways and methods to make fish feeds by using different alternatives and the company has developed a technology to produce the fish feed from bacteria which is helpful in developing high quality fishes and also making impact on the environment in a positive manner. This research conducting buy the company is positively effecting the environment and this shows the nature of this research. BSF Ltd is doing its research in a way that it can develop sustainable environment in the process of fish farming. All the activities in the research program are executed in most effective and efficient manner by considering the environmental aspects as in there should not be any harm to the society (CBC. 2016).

BSF Ltd is doing its research in way to provide help in the process to making more effective and sustainable environment for fishing that can make impact on the effective development of society and fulfilling demand of the growing population. Fish farming is affecting the society as in there are used plant feeds for developing quality fishes and this plant based feeds are prepared from the corn, soybean, sunflower, etc. These crops are also using by the population which is growing day by day and their requirements are also increasing. These new innovative research resulted in making fish feed from bacteria in place of plant feed and it is making impact on the available plants and crops for the population. This innovative technique is not harmful for the quality of fishes and also for the environment and this show that this research is adding value in the society by its eco-friendly nature (Lothe, 2013).

2. Discuss the problems with the early the research done by BSF Ltd.

BSF Ltd. is a bio- research company which is making its research in the field of developing most suitable and sustainable fish feed which can be helpful for increasing the quality of fishes and also the effective environment. Earlier fish feed was prepared from small fishes for the big carnivorous fishes and small fishes are provided natural feeds. After that company is focused on developing fish feed from the various plants and crops like canola, corn, soya-bean, sunflower, etc. This is an expensive way for preparing fish feed and also making impact on the supply of these foods in the market for the use of this growing population as a huge part of these crops is taken by the fishers. This plant food is having high quantity of protein, starch and fibre in it and this is not good for the fishes and their quality as this food makes the bones and muscles of fishes very soft. And it is also making the poor people to not getting their proper diet and leads them to malnutrition (Lothe, 2013).

The other problem arise in making plant based feeds was its cost which was very high and making also making a huge investment of the company and also results were not positive and effective. BSF Ltd. made an investment of around $360 million AUD for developing plant based fish feed among that investment around $120 million AUD were wasted which is a failure of a project or an experiment of Piscavorian fish and other fishes. This failure and loss of the investment is a problem for the company. The high level conversion rate of plant based feed was also considered for the company as a challenge in this research and development. And this technique of developing fish feed is generating an environmental issue as in these crops which are used in making plant based fish feed should be used and provided to the human population as in the poor people are not capable to get these crops and this is making them sick and malnutrition and this costly method to feed the fishes are also making them costly and will not be affordable for the poor people (Sarker, et. Al 2016).

3. Define and discuss the nature of and differences between research and development (R&D). Also, discuss how research and development are accounted for, why the differences, and why firms engage in R&D.

In the present business environment all the organisations try to develop competitive advantage and core competencies to lead among its competitors and achieve position of market leader by enhancing the performance and quality of activities of the organisation and this can be done by doing research and development and there are separate committees or departments which is focused on improving the process and activities of the company to achieve better results. These research and development expenses are treated as long term investment in any organisation.

Research- Research is a process to study or analyse different sources and materials to identify and evaluate different factors and aspects and to achieve and get solution of different problems which are the basic of conducting any research. This is a way to develop results as in conclusion of different problems which are set in the initial of the research process (Sarker, et. Al 2016).

Development- Development process takes place when there are different researches and new ideas are generated to improve and develop the existing process and activities of the company. Development process helps in making it possible to use the new ideas and research results and also making benefit out of them and getting effective and profitable results from them. Development is incomplete without research and research is not effective without development process (Schmidt, 2014).

Difference between research and development-

Research

Development

Research is an investigation process in which there effective analysis and investigation is done of different factors and available alternatives of things and result is defined as the conclusion of the research problems and questions framed in the initial.

Development is the process to gives a shape to the researched ideas by using them practically and involving them in the organisational activities and processes by which quality and effectiveness of the organisational activities. This is ultimate use of research and its results.

Research is preceding activity as in development starts after the completion of the research process.

Development is the succeeding activity and research is the preceding activity of development. It starts after the completion of the research process (Hytönen, et. Al 2012).

Researches are treated as innovation in the process identifying new ideas and resolving the research problems by way of effective analyses and it is important to be adopted in the process of scientific decision making. It is important to take most effective decisions in any organisation by analysing all the available aspects and options (Rust, et. Al 2011).

Up gradation of organisational activities and processes are targeted in the process of development. Development is required and practical part of the process of research and development is to be conducted in the development process and it defines all the aspects of its effectiveness and efficiency by the results of development process.

4. What is the fair market value patent—give your assumptions and calculations.

BSF Ltd. is having patent on the technology to produce the fish food from a bacteria which is effective and sustainable way to produce fish feed. The fair market value of patent can be defined as the price of the patent which can be afford by the buyer and depends on the market demand of the patent in the market. It also depends on the expenses made by the company to develop that technology and patent (Grimaldi, et. Al 2015).

In the given case study BSF Ltd. has been offered two situations which are as follows.

$200 million AUD every year for ten years (Case 1)
$700 million AUD for two years (Case 2)
Discount rate is 8%

We will calculate the fair market value of the patent for both the situation and it will be a base for the effective decision making what condition to be selected by company to sell its patent (Mandal, et. Al 2012).

In case 1the fair market value is $1342.016 Million AUD and in case 2 it is $1200.274348 Million AUD. And now we can see that case 1 is more beneficial for the company and should be selected (Kishimoto, 2011).

Case 1-

Basis

Expenditure (A $ Million

P.V. factor

P. V. factor amount

Product

1

200

8 %

0.925925926

185.1852

2

200

8%

0.85733882

171.4678

3

200

8%

0.793832241

158.7664

4

200

8%

0.735029853

147.006

5

200

8%

0.680583197

136.1166

6

200

8%

0.630169627

126.0339

7

200

8%

0.583490395

116.6981

8

200

8%

0.540268885

108.0538

9

200

8%

0.500248967

100.0498

10

200

8%

0.463193488

92.6387

Total

1342.016

Case 2-

Basis

Expenditure (A $ Million

P.V. factor

P. V. factor amount

Product

1

700

8 %

0.925925926

648.1481481

2

700

8 %

0.85733882

600.1371742

Total

1200.274348

5. Show the full set of journal entries for the R&D transactions from 2013 to 2016 (include the grant from CSIRO) and explain your decisions—especially how you treated the CSIRO grant.

BSF Ltd. is doing research program for innovating different techniques to prepare fish food which is sustainable for the fishes and the environment. Company has done various activities which are defined in journal entries as follows (Mandal, et. Al 2012).

Journal entries of BSF Ltd. for year 2013 to 2016-

Date

Particular

Dr A $ (Million)

Cr.

1

Cash a/c dr.

To capital account of R&D

(Initial investment is done by the BSF Ltd. in producing plant based feed.)

360

360

2

Loss of production a/c Dr.

To purchase a/c

(Loss is occurred by the collapsed of high-value piscavorian fish failed to thrive.)

120

120

3

Grant/ donation a/c Dr.

To CSIRO a/c

(Grant or donation is received from the Commonwealth Scientific and Industrial Research Organisation.)

500

500

4

R&D a/c Dr.

To bank a/c

(expenses are made in the research program.)

340

340

5

R&D a/c Dr.

To bank a/c

(Expenses are made in the research program (Yang, et. Al 2015).

160

160

6

Alternative aquaculture feeds Dr.

To capital a/c

(BSF Ltd. committed to invest or spend in the alternative aquaculture feeds.)

100

100

7

Alternative aquaculture feeds Dr.

To capital a/c

(BSF Ltd. committed to invest or spend in the alternative aquaculture feeds.)

100

100

Total

1680

1680

6. BSF Ltd. management asserted in a prospectus that the patent values were predicated on BSF Ltd. having exclusive control over the bacteria-based feeds technology. How reasonable is that assertion—support your answer with references to current and recent (e.g. last decade or so) research.

BSF Ltd. has been developed an innovative technique which can be used to preparer fish feed from bacteria which is effective way to have sustainable quality of fishes and environment and also making the process cost effective. This innovation can be beneficial for the fishers to be adopted to produce effective food and also protect the environment in cost effective manner. This technique has been patented by the BSF Ltd. which provides right tom the company to decide whom the company will sell the payment and right to use it. It is defined in the way of fair market value of the patent and government wants to use this technology in the market to achieve positive results (Chavanne, et. Al 2016). There are provided two conditions for the fair market value of the patent in which $200 million AUD every year for ten years and $700 million AUD for two years at a discount rate of 8% every year. In the first situation the fair market value of the patent is $1342.016 Million AUD and in other case it is $1200.274348 Million AUD. These values defines different ways on the basis of which company can take decision for selecting the most suitable option calculating fair market value of patent.

The assertion of patent in the prospectus of the company provides exclusive control over that innovation and this patent is treated as the asset of the company as in company can sell the patent and its right to use in the market for a defined price and company can recover its expenses and spending made on this research project. Company has made $360 million AUD as initial investment on the plant based feeds and a grant has been received of $ 500 million AUD which are invested in the research program as in two installments of $340 million and $160 million. And company has also committed to invest $200 million AUD in two years to develop an alternative aquaculture feed. On this basis all these information the assertion of patent is reasonable (Attia, et. Al 2012).

Conclusion

This report is the detailed study of an Australian company Bio-Sustainable Feeds (BSF) Ltd. which is listed on Australian stock exchange (ASX). The company is making its efforts to develop different aquaculture feeds which are helpful in maintaining sustainability in the market and also important to be considered for effective environmental control and management. There are defined impacts on the society of this research and all the challenges which are faced by the company while executing this research process are defined in this report effectively. Fair market value of the patent is also done in accordance with the given conditions in case study and for keeping appropriate record of the activities and transactions there are formed journal entry of the activities conducted in last years in the company.

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